"We have some great news," said O'Malley, "more great news about ... the students of Maryland who are achieving at some of the highest levels that we have ever seen in the history of standardized testing."

In the College Board's "Annual AP Report to the Nation," Maryland took the top spot from New York for the first time since 1955, earning the state its second first place finish in two months in a national education ranking. Maryland's schools were ranked No. 1 in the nation by Education Week Magazine in January.

"The College Board has been tracking the performance of every state in this nation for 55 years ...," Grasmick said. "And in 55 years the state of New York has always been No.1 in terms of Advanced Placement—both the number of students participating and the achievement of those students on the national test. This year we are exceeding New York and as the governor said, 'We are No.1!'"

Twenty-three percent of graduating seniors in Maryland in 2008 earned a 3 or higher on Advanced Placement exams out of a possible score of 5. Nationally, only 15 percent of seniors scored a 3 or higher.

"There are several things we are proud of when we look at the statistics of this," she said. "One is a philosophy that the floor is not the ceiling and in Maryland, we want to move toward a high ceiling."

Moving toward that high ceiling means Maryland must work to close the performance gap on Advanced Placement exams between white and minority students. It is not an impossible goal, said Grasmick, pointing to the gains made by Hispanic students.

"Maryland is one of the 18 states cited for reducing any disparity among our minority populations," Grasmick said. "With our Latino population, there is absolutely no achievement gap."

Hispanic students represent 6 percent of Maryland's population and account for nearly 7 percent of students scoring a 3 or higher on Advanced Placement exams.

African-American students have made more modest gains. The percentage of black students who scored a 3 or higher on Advanced Placement exams has nearly doubled since 2003, reaching 9 percent—the fourth highest percentage among African-Americans in the nation.

Eleanor Roosevelt High School in Prince George's County and Paint Branch High School in Montgomery County are two out of 16 schools nationwide that were praised by the College Board for having a high percentage of black students who passed AP exams in chemistry and world history, respectively.

But Grasmick said the next step is to work to completely close the achievement gap.

One key step is for the state to award a large portion of a $2 million dollar "competitive grant" to a school system with a large minority population. Grasmick said Baltimore schools would likely be the recipient.

"We're thankful that we're able to land this grant," said Delegate Curt Anderson, D-Baltimore, adding that the city has been applying for many grants to help replace what is being lost in budget cuts.

Baltimore is projected to loose $23 million in state aid in FY 2010. It is not unlike other school districts that are facing budget shortfalls.

Prince George's County, home to Eleanor Roosevelt High School, one of the two schools praised by the College Board, is also facing a possible $35 million cut in funding in 2010.

Sen. David Harrington, D-Prince George's, said he is concerned the progress made at Roosevelt and throughout the state is in jeopardy.

"I am concerned about that. I think there is a direct correlation between funding for schools and performance," he said."We are No. 1 because the state has invested in education."

Daniel Kaufman, spokesman for the Maryland State Teachers Association, agreed Maryland schools have made great progress, but the challenge is for schools to keep progressing in an economic downturn.